Do I still need to pay my outstanding debt on a vehicle that has already been repossessed? 38 Answers as of July 02, 2013

I had a car repossessed (over 3 years ago) but still owe money on the loan. Since the car is no longer in my possession, would it be considered secured or unsecured? In chapter 7 filing how would I list outstanding debt on a vehicle that has already been repossessed?

You don't need to pay this if you file for bankruptcy. Since you do not have the car it is not secured. You list the debt on Schedule F, the creditor on the matrix, and answer the questions on the Statement of Affairs - note no. 5. If you are preparing your own bankruptcy paperwork you need to read it ALL CAREFULLY and fill it all in. The Nolo Press books can be helpful. Take your time and study everything you can find in the books and also on the bankruptcy court website for your District. There is usually a section for pro se filers. Mistakes can cost you your discharge or worse. 1 in every 250 consumer cases is audited and an omission or mistake can potentially land you in prison.

Assuming the collateral has been sold and the proceeds offset against your debt, the remaining balance on the loan will probably be unsecured. But your bankruptcy lawyer should be able to assist you with the specifics of your case.

Simply because the car has been repossessed does not mean that the money is not owed. The creditor usually sells the vehicle at auction and then moves forward with for the amount still owed plus all the other additional fees such as towing, storage and auction fees. This is called a deficiency action. Once the auto was repossessed the debt became unsecured.

Now that the car has been repossessed and sold at auction, you still owe a deficiency balance on the loan. Without a bankruptcy, the creditor can try to collect this from you. If you are filing a bankruptcy, you would list this debt as unsecured (on Schedule F).

First, whether it is secured or unsecured is different from money being owed. If it was repossessed, the car likely was sold for less than what was owed and that difference is still owed. You can file bankruptcy to discharge the balance which is still owed, and it would be listed on Schedule F as an unsecured dent as there is no longer any car to secure the balance left due.

It is considered an unsecured debt unless the creditor sued you, a judgement was entered and a lien filed. If no judgment/ lien was filed, you will list it on schedule F. It stopped being secured once the car was repossessed and sold.

It was a secured note; until they repossessed it. They took the car, sold it and applied the sales price to the note. The amount of money still left over after applying the sales proceeds is the deficiency and yes, you are still liable for this debt. If you file a Chapter 7, this debt would be unsecured and you could discharge it.

Yes, you have to pay the deficiency from the repossession. In a Chapter 7, you would simply list the creditor who financed the car. If that doesn't make sense, then you need to hire an attorney to make sure your bankruptcy is handled correctly.

A secured debt, by definition, means that if you don't pay, the creditor has the right, as security for the loan, to take it back. Once it is taken back and sold, any remaining balance is no longer secured since there is no more asset as security, unless the security agreement gives the lender the right to go after other assets. An unsecured debt is one based on trust, rather than retaining any rights in the asset. Repossession usually does not extinguish the obligation to pay. The debt is still valid and can be sued upon, unless a bankruptcy is filed. After repossession, if no other security was listed in the agreement, the balance on the debt would usually be listed as unsecured in a bankruptcy petition.

You still owe the balance. In most Chapter 7's it can be discharged so long as you don't screw up the case. Your post indicates that you are about to screw up, as it tells me you plan to file pro se. Do not. I repeat that. Do not. Having a lawyer will make sure things are done right. It is money you cannot afford not to spend.

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